Dilip Buildcon to monetise old projects to execute new hybrid annuity ones

Dilip Buildcon might opt for a follow-on public offer during the year

Infrastructure firm Dilip Buildcon, in a bid to get National Highway (NH) contracts, is planning to monetise its old projects for executing new hybrid annuity projects being offered by the central government.

According to sources, the company has firmed up plans to sell its completed projects, mainly in Himachal Pradesh, Gujarat, Maharashtra and Madhya Pradesh.

The company is executing three NH contracts worth Rs 3,333.13 crore and covering a length of 261.72 km in Uttar Pradesh, Maharashtra and West Bengal, according to the latest data of the National Highways Authority of India (NHAI).

Last week, Dilip Buildcon announced that it had bagged two EPC (engineering, procurement and construction) projects worth about Rs 700 crore in Maharashtra from the ministry of road transport and highways. But the company is focused on executing hybrid annuity NH projects during 2017-18.

According to a source, the company will participate in bids to win hybrid annuity projects. They will account for 40 per cent of the mix of the company’s highway projects in 2017-18. The remaining contracts would be executed on EPC mode.

Dilip Buildcon, which has a market capitalisation of Rs 5,070.7 crore on the BSE, might also opt for a follow-on public offer during the year. When and how much have not been decided. Queries to the company were not answered.

Net profit jumped 151.7 per cent to Rs 108.6 crore on a 41.9 per cent rise in net sales to Rs 1,388.4 crore in the December quarter of 2016 over the same period a year earlier.

With the government focusing on tendering more highway contracts on the hybrid annuity mode, companies like Dilip Buildcon, MEP Infra and Sadbhav Engineering stand to benefit due to cleaner balance sheets.

The central government was unable to achieve its road contract award target of 25,000 km last year.

The number of EPC awards might go up during the current year as the finance ministry has increased the budgetary outlay for National Highways to Rs 64,000 crore in 2017-18 from Rs 57,676 crore in 2016-17.